NEW YORK — Higher costs of film releases blew out Cineplex Odeon Corp.’s second-quarter loss 32% to $14.5 million, it said Thursday, on 8% higher revenue of $127.2 million.
The increased red ink prompted Cineplex CEO Allen Karp to attack Hollywood’s increasing tendency of opening blockbuster pictures on 4,000-5,000 screens, which Karp said isbad for the life of the films, and bottom line of exhibitors.
Cineplex, which said it was still negotiating a merger with Sony Corp.’s Loews Theatres, suffered a 37% drop in cash flow — earnings before interest, taxes, depreciation and amortization — to $5.6 million.
Hot box office
Karp claimed the exhibitor had outperformed the industry by increasing its box office 6% in the quarter compared to the industry’s increase of 2.9%. Earnings suffered, he said, because of higher film costs.
“Exhibitors pay a much larger percentage of box office revenue to a film’s distributor in the opening weeks of a film’s release compared to the percentage paid during the later weeks,” Karp said. As a percentage of B.O. revenue, Cineplex’s film costs rose in the second quarter because of the release patterns in the late spring and early summer.
Film pattern baldness
“The release pattern of distributing films to 4,000 or 5,000 screens at once is harmful to both the exhibition and distribution industry for a number of reasons. It sets the stage for the early burn-out of new releases. … other films are not seeing the positive effects of spill-over business.”
Karp added he was “hopeful that this phenomenon is an aberration.”